HONG KONG (CNNMoney) - The oil market's May meltdown is getting worse

While the steep price fall is likely to force Opec members to extend production cuts when they meet later this month, analysts do not expect producers to scale back output any further.

At 2:29pm BST, the WTI front-month futures contract was down 0.31% or 14 cents to $45.38 per barrel, while Brent was down 0.06% or 3 cents to $48.35 per barrel.

"We still think the market does rebalance by the end of this year as long as OPEC continues its production cuts", Amrita Sen, chief oil analyst at the London-based consultant, said in a Bloomberg television interview.

Even though the cartels production fell by 1.6 million barrels per day from its peak in November and fell for the fourth consecutive month in April, the increase in U.S. shale production, inventories and rig count have single-handedly offset the efforts of the cartel to push crude prices.

Other big losers included Whiting Petroleum Corp., which fell as much as 7.9%; Occidental, which dropped 4.9%; and Carrizo Oil & Gas Inc., which declined 5.9%.

There is now the possibility prices will remain below the critical $50 threshold if US oil production continues to increase, and OPEC and Russian Federation fail to extend the production deal into the second half of the year.

"Under the current output cut, the shale oil producers pumped more oil and this hasn't helped the oil glut", he said.

Silencing critics who predicted OPEC would cheat its own quotas, the cartel has shown considerable restraint this time around by overwhelmingly complying with its supply cut agreement.

The US West Texas Intermediate benchmark dipped below $46 per barrel for the first time since late November. The kingdom is seen as a driver of OPEC's production cut deal, with Saudi Energy Minister Khalid al-Falih telling an April conference in Abu Dhabi there appeared to be a growing consensus on a need to extend the cuts, as global inventories remain stubbornly high.

"On the other hand, the refusal to reduce oil production will lead to price slump to $40 a barrel", Yakushev added. They jumped to about 24.3 million barrels a day in January, the month the deal was implemented.

Shale drillers on Thursday paid the price for pouring more and more oil onto global markets.

Prices that "overshot" to the mid-to-high US$50s after the output deal are now "back to reality" amid surging USA supplies, Shum said.

"It is now-or-never for oil bulls", said USA commodity analysis firm The Schork Report.

US crude stockpiles fell less than expected last week, while gasoline inventories grew as demand remained weak, the Energy Information Administration said on Wednesday, keeping concerns about global supply on a simmer.

  • Zachary Reyes